Great Opportunities Exist While Rates are Low


Filed under: Market Comentary


refinanceAccording to a recent article from CNBC, close to seven million homeowners aren’t taking advantage of the low mortgage rates and refinancing.

Real Estate reporter Diana Olick explained that after the Federal Reserve raised its target interest rate in early December, it was expected that mortgage rates would rise.

But according to Ben Graboske, Black Knight Data & Analytics senior vice president, “Global economic shocks then sent investors looking for the safety of U.S. Treasury’s, driving down yields on benchmark 10-year bonds. Mortgage interest rates began to fall in defiance of prevailing wisdom, and the refinanceable population grew by 30% in the first six weeks of 2016.”

Olick wrote that mortgage interest rates dropped 30 basis points in that time. And, by the end of February, 6.7 million borrowers could have saved an average of $3,000 per year. These borrowers have enough equity in their homes and high enough credit scores to qualify for refinances.

Graboske added, “It’s lack of awareness of the opportunity, and how to act on it.”

Olick explained that more than three million borrowers could save $200 a month or more by refinancing, and one million borrowers could save $400 a month or more.

Even though mortgage refinance application have increased in the past two months, millions of borrowers are not taking advantage of the situation. Olick says this is due to borrowers unaware of the possible savings, or being just too lazy to go through the refinance process.

Graboske said, “There are costs that come into play for sure and there is often the perception of costs. Still, if you look at this population, we have 1.5 million borrowers that are sitting at almost a full point above what they could be.”

Olick added that mortgage rates did move slightly higher in the past week, but not enough to change most of the analysis. Millions of borrowers are still choosing to pay more than they have to on their home loans. She also explained that this refinance opportunity is likely to vanish in coming months should rates rise as expected.

If you have any questions about the mortgage industry, please feel free to give me a call and we can discuss whatever is on your mind.

Source:  http://www.cnbc.com/2016/03/08/why-arent-you-refinancing-your-mortgage.html


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